KCP&L requests rate increase from Kansas Corp. Commission
If approved, the daily increase for a typical residential customer is expected to be $0.41
Kansas City, April 25, 2012 — Kansas City Power & Light Co., a unit of Great Plains Energy, Inc., announced it has filed a rate increase request with the Kansas Corp. Commission to increase base rates for electric service in its Kansas service area.
According to a release, the company is seeking to raise rates 12.9 percent. If approved, the daily increase for a typical residential customer is expected to be $0.41. The rate increase request process takes about eight months in Kansas. New rates will not be effective until January 2013.
Among the drivers for the increase are the investments the company has made at its generating facilities that will allow KCP&L to meet future state and federal renewable energy and emissions control mandates, the company noted.
These investments include additional wind generation in Spearville, Kansas and environmental upgrades at its La Cygne Generating Station, one of the company's largest coal-fired generating facilities.
The company said its first wind facility in Kansas, named Spearville 1, was constructed in 2006 and consists of 67 wind turbines producing 100.5 MW of electricity — enough to serve about 33,000 homes. That facility is already reflected in customer rates.
The Kansas Renewable Energy Standards Act, passed by the Kansas Legislature in 2009, requires KCP&L to have 15 percent of its capacity provided by renewable resources by 2016 and 20 percent by 2020.
As a result, the company said it needed to add additional renewable energy to its portfolio in order to help meet the requirement. KCP&L added an additional 32 wind turbines, producing 48 MW of emission-free electricity. The new facility, known as Spearville 2, has been generating energy and serving customers since late 2010. The cost of this facility is included in this rate increase request.
KCP&L added it is in the process of making significant environmental upgrades at the La Cygne Generating Station, a coal-fired power plant which is jointly owned by KCP&L and Westar. The two units at La Cygne make up the second largest station in KCP&L's system and produce 1,400 MW of electricity. This station plays a vital role in ensuring that the company can continue to provide affordable, reliable electricity to customers in the future.
Included in this rate increase request are costs that have been incurred to date to construct and install air quality control equipment at the La Cygne station, the company said. These upgrades are required to meet future state and federal environmental regulations and include installation of a new chimney to serve both units, baghouses (which reduce particulate matter) and a selective catalytic reduction (SCR) system on Unit 2 (which works to significantly reduce nitrous oxide emissions). A SCR system was installed on La Cygne Unit 1 in 2007.
To determine the best way to continue to serve customers' electricity needs today and for decades to come, KCP&L considered several options for meeting the environmental regulations, including retrofitting the unit for natural gas as a fuel source and shutting down the plant. Making the environmental upgrades and continuing to operate the coal-fired unit proved to be the lowest cost option for customers.
The environmental equipment being installed will reduce emissions and improve regional air quality. In August 2011, as part of a predetermination case in Kansas, the KCC approved the project and cost estimates. Construction is underway and the project is slated for completion in June 2015.
In addition to the investments in its generation facilities, KCP&L said it is requesting to recover costs related to increased investment in and maintenance of its electrical infrastructure. This investment was necessary to maintain reliable service for its Kansas customers. Over the last several years, the company has made infrastructure improvements to the transmission and distribution systems, including improving and modernizing substations, replacing aging equipment and increasing automation. KCP&L customers benefit from reduced outage times and improved reliability in these areas of its system.
As part of this rate case filed, KCP&L said it is requesting that the KCC approve a change to depreciation rates to reflect the large increase in plant in service that has been added. In addition, new depreciation rates would more accurately allocate costs to the customers who benefit from the use of the assets. The company is also requesting a change to the current method of allocating costs between its Kansas and Missouri jurisdictions to better reflect the company's summer peaking business.
Headquartered in Kansas City, Mo., Great Plains Energy Inc. is the holding company of Kansas City Power & Light Co. and KCP&L Greater Missouri Operations Co., two regulated providers of electricity in the Midwest.